Employment Agreement [Amendment] - First Virtual Holdings Inc. and Nathaniel Borenstein
FIRST VIRTUAL HOLDINGS, INCORPORATED
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement (the "Amendment") is effective this
16th day of January, 1998 (the "Effective Date"), by and between Nathaniel
Borenstein ("Employee") and First Virtual Holdings Incorporated ("Company").
WHEREAS, Employee and Company are parties to that certain employment
agreement (the "Employment Agreement") dated August 8, 1996;
WHEREAS, Employee's employment with Company under the Employment Agreement
is "at will" and may be terminated at any time by Employee or Company;
WHEREAS, the present financial circumstances of Company require that
Company reduce its payroll expenditures;
WHEREAS, Company has offered Employee a choice of termination of
employment with severance benefits or continued employment with Company under
the terms of this Amendment;
WHEREAS, Company has adopted a compensation reduction program
(the"Program") pursuant to which Employee may elect to reduce Employee's rate
of compensation and Company may grant Employee options to purchase common stock
of Company under the 1995 Stock Option Plan of Company;
WHEREAS, Employee has voluntarily agreed to amend the Employment Agreement
and participate in the Program pursuant to the terms of this Amendment; and
WHEREAS, Company acknowledges and agrees that, while this Amendment is in
effect, Employee may wish to seek and obtain other employment, and Company
agrees Employee may do so to the extent that such activity does not interfere
in any way whatsoever with Employee's obligations as an employee of Company;
NOW, THEREFORE, in consideration of the foregoing recitals and the
respective covenants of the parties contained herein, Company and Employee agree
as follows:
1. Resignation as Company Officer. Employee hereby resigns as an officer
of the Company. Employee is no longer considered an insider for stock
trading purposes.
2. Compensation. Effective as of January 16, 1998, and continuing through
June 30, 1998 Employee's compensation shall be $1,150.00 per month.
3. Grant of Option. As of the Effective Date, Company shall grant
Employee an incentive stock option (the "Option") within the meaning
of and to the extent permitted by Section 422 of the Internal Revenue
Code of 1986, as amended, to purchase 41,426 shares of common stock of
Company. The terms and conditions of the Option shall be as set forth
in that certain agreement between Company and Employee describing the
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Program, which letter is incorporated herein by the reference, and by
the terms of the Company's 1995 Stock Option Plan and standard form of
stock option agreement.
4. Other Consideration. In consideration for Employee's agreement to
accept stock options and the above described compensation. Company
grants to Employee all equipment specified in Attachment A.
5. Ratification. In all other respects, the Employment Agreement is
hereby ratified and affirmed, including but not limited to health care
coverage and option vesting provisions.
6. Termination. Your employment will terminate with no further action by
either party on June 30, 1998, provided however that either party may
terminate this agreement with ten (10) days written notice. You will
earn the options hereunder and be paid your salary and be entitled to
any benefits through the notice period.
7. Waiver of Severance. In consideration of the grant of Options
hereunder and transfer of equipment as found herein, the parties agree
to execute the attached Severance Agreement in substantially similar
form provided that neither party shall be required to execute the
Severance Agreement if either can document a claim that has arisen
between the date of this Amended Agreement and June 30, 1998 and is
not willing to waive same without additional consideration.
8. Securities Indemnification. Without expanding or modifying same, the
Company acknowledges its continuing obligations under its letter
provided Employee, dated October 9, 1996 about certain rights of
indemnification.
IN WITNESS WHEREOF, each of the parties has executed this Amendment, in
the case of the Company by its duly authorized officer, as of the day and year
first above written.
COMPANY: FIRST VIRTUAL HOLDINGS, INC.
By: /s/ LEE H. STEIN
-----------------------------------
Lee H. Stein
Chairman and CEO
EMPLOYEE: /s/ NATHANIEL BORENSTEIN
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Nathaniel Borenstein
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[HOLDINGS INCORPORATED ]
February 12, 1998
Nathaniel Borenstein
514 East Washington
Ann Arbor, MI 48104
RE: COMPENSATION REDUCTION PROGRAM
Dear Nathaniel:
The Board of Directors ("Board") of First Virtual Holdings
Incorporated (the "Company") has approved a compensation reduction program (the
"Program") whereby the Board will amend your employment agreement with the
Company to reduce your annual base compensation for the period January 16, 1998
through and including June 30, 1998 by 93.1 percent (93.1%) from $16.666.00
monthly to $1150.00 monthly. As consideration for this reduction in
compensation, the Board will grant you an incentive stock option (the "Option")
as described below. The Company will use the cash proceeds derived from the
reduction in your base compensation for general corporate purposes, and in
doing so the Company will rely on your representation, evidenced by your
signature below, that your reduced compensation will be sufficient to meet your
personal financial needs.
The Option will be for 41,426 shares of the Company's common stock
("Common Stock") at an exercise price of $2.06 per share, the fair market value
of the Common Stock on the date of grant. The Option will vest 3,766 on January
31, 1998 and in equal monthly installments of 7,532 shares at the end of each
succeeding five (5) months. The term of the Option will be ten (10) years. The
Company engaged the services of an independent compensation consulting firm to
advise the Company as to the number of shares that could be offered you for your
agreement to forego compensation. The Board of Directors have made a
determination, based on this advice and said determination is reflected in this
letter. You may review these the consultant's letter at any time prior to
agreeing to participate in the Plan.
You should be aware that the Option involves significant investment
risk. If the fair market value of the Common Stock declines below your exercise
price, your option will have no value. The Company cannot guarantee the fair
market value of the Common Stock at any time. In addition, you will incur
certain tax liabilities with respect to the exercise of the Option and the
subsequent sale of the stock. The Company cannot give you tax advice, and we
encourage you to consult a tax advisor with respect to the Option.
You should also be aware that your election to participate in the
Program will be irrevocable. At no time will you have any right to any of the
cash compensation you elect to forego, even if you agree to cancel a portion of
the Option. For this reason, you should consult your personal financial advisor
before you elect to participate in the Program.
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Nathaniel Borenstein
February 12, 1998
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To participate in the Program, promptly return a signed copy of this
letter to Lew Silverberg at the Company. Please also execute and return a copy
of the enclosed "Stock Option Agreement for Reduction in Compensation".
With your signature, in addition to indicating your willingness to
participate in the Program, you are representing to the Company that your
reduced compensation will be sufficient to cover your personal financial
obligations. In addition, you are acknowledging that your employment with the
Company remains "at will," and neither your election to participate in the
Program nor the vesting of the Option shall affect your ability or the ability
of the Company to terminate your employment at any time, with or without cause.
Very truly yours,
/s/ LEE STEIN
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Lee Stein
Chairman & CEO
/s/ NATHANIEL BORENSTEIN
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Nathaniel Borenstein
Date 2/13/98
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